Greyscale Bitcoin Trust
The Good news
The Greyscale Bitcoin Investment Trust, whose stock market symbol is symbol GBTC, is currently the only way to buy Bitcoin on the American Stock Markets.
What is a trust?
A trust is a company that owns a fixed amount of a given asset and sells investors shares which represent fractional ownership of the held asset. You need to under stand the delineation of ownership of a trust.
For Example:
A Gold Trust could own one kilograms or 1000 grams of Gold.
This Trust could sell 1000 Shares Total, with each share representing one thousandth of the trust’s assets or in this case 1000 shares represents 1000 grams of gold and each share represents one gram of gold.
Alternatively, the same Trust which owns 1000 grams of gold could sell 1000 times as many shares, one million, and each share would represent one millionth of the trust’s assets or one thousandth of a gram of gold.
Delineation of Assets and Ownership
The important parts of the Trust Document are details of a trust that I explain above in the example. I call those details the delineation of assets number and share ownership.
A more boring way to describe the details above are: The other important thing is the delineation of assets fixed or variable, and is the number of shares the trust can sell fixed or variable, and is the amount of assets held by the trust fixed or variable. This is why you need to read and understand the terms of the trust. As my parents use to say, the Devil is in the Details. In cryptocurrency this is called due Diligence.
GBTC the Bitcoin stock
Investors refer to Greyscale Bitcoin Trust, symbol GBTC as a stock, and as the only stock offered on NASDAQ or any other United States public stock exchange that holds bitcoin as its primary asset. It is a stock, but it is also a trust. As such you need to understand the delineation of shares and asset ownership.
the delineation of shares and ownership of GBTC
As of December 1st, 2020, The Grayscale Bitcoin Investment Trust issued 564,109,000 shares and each cost 23.04 USD on NASDAQ and each share represented 0.00095169 Bitcoin.
The convenience of owning your Bitcoin in Grayscale BTC Trust
The good news is you don’t have to remember your 12 secret words or write down your 23 digit alphanumeric private key.word
The cost of Grayscale Investment Trust
The market value of the Bitcoin represented by one share is $18.17 USD. So the difference between the price of the share at 23.04 and the value of the Bitcoin it represents is $24.04 minus $18.17 is $5.87 USD. That’s what I call the Trust Premium* and is the cost of the convenience of owning Bitcoin through a trust versus in your own wallet.
The fine Print
Form the sake of accuracy, I will go to the source, Grayscales webpage
The Specifics Are Subject to Change: The amount of BTC held by the trust and the amount of BTC per share is subject to change over time due to factors including shares issued and the 2% annual fee paid to the trust.
This means the number of shares the trust can sell isn’t fixed, and is the amount of assets held by the trust isn’t fixed, so the share value in Bitcoin isn’t fixed. While the website says they will strive to maintain close to market value that concept isn’t defined.
Summary
I think Grayscale Bitcoin Trust or GBTC is wonderful for Bitcoin and for cryptocurrency because they are making Bitcoin a mainstream investment, which increases the size of the pool of potential and thus actual investors,. This is wonderful because it increases buying pressure, which in general raises the price. But is it good for individual investors, it depends, each investor has to decide if the price of the convenience is worth it.
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